Written evidence from the Institute of Regulation (IoR) (UKR0028)

1. Introducing the Institute of Regulation

The Institute of Regulation (IoR) was established as a membership organisation in 2021, building on previous informal networks between UK regulators. It was formed to improve UK regulation by encouraging the spread of good regulatory practice; providing education and training for regulatory professionals; and building peer networks for those involved in UK regulation.

Our aim is to become the ‘home of good regulation’, and trusted, authoritative, and supportive on regulatory matters.

Already the IoR membership network extends to over 500 individuals, regulators and regulatory experts, covering around a quarter of UK regulatory bodies, as well as affiliate members from the commercial and third sectors who work with, supply or have an interest in regulatory issues. 

The IoR is first and foremost professional network, not a trade body nor representative organisation. As such, the IoR encourages and supports its members in shaping their responses to inquiries and calls for evidence, such the present House of Lords inquiry.

To support our members’ responses to this inquiry and a parallel call for evidence on ‘Smarter Regulation’ from the UK Government, the IoR held an online session for its members and others, under the Chatham House rule, on 16 November 2023.

This response represents the views of the Institute of Regulation directors, informed by collated insights from the IoR membership.

2. Further information

Further information about the IoR can be found on our website: www.ioregulation.org. Inquiries can be directed to: info@ioregulation.org.

3. Opening statement

Notwithstanding that the IoR is not a representative body, the Institute’s directors offer the following general comments on what makes good regulation. These remarks draw from decades of combined experience in regulation, from regulatory literature and from work with regulatory bodies in several countries.

a. Good regulation prevents harm and protects people too.

Efficient and effective regulation enables businesses to thrive and innovate and public services to be well run and improve. This requires as few unnecessary constraints as possible on those being regulated. However, good regulation has a parallel and equally important role to prevent harm and protect those who may be vulnerable. This means, for example, preventing unsafe products and medicines from being sold, and unsafe professionals from practicing, while making the regulatory process as unobtrusive as possible.

By creating a level playing field, regulators not only protect consumers and service users, but enable responsible UK businesses to compete fairly without unregulated firms undercutting their livelihoods and jeopardising UK jobs.

Good regulation, like the law, is therefore a public good, from which everyone can benefit. If the regulation is efficient and well-constructed, the benefits of regulation to society overall will outweigh the costs to individual businesses or service providers. This was found in recent research from Department for Work and Pensions (DWP) and Financial Conduct Authority (FCA)[1].

What makes good, balanced regulation needs to be better understood. And UK regulators, like all public bodies, require sustainable levels of funding to be able to fulfil their statutory and societal remits.

b. It is important to reduce the regulatory burden where possible.             

Good regulatory regimes should be as efficient as possible. This will reduce cost to the taxpayer and burdens on those being regulated, whether they are businesses, public services, or individuals. All regulators should aim to reduce regulatory burdens where they can safely do so. The first step to do this is to understand the nature of the burdens imposed. For instance, Ofqual produces an annual regulatory burden statement[2] to enable them better to understand those they regulate.

Regulatory burdens can be reduced, for example, by reducing levels of assessment or inspection of existing regulations, or by removing regulations altogether. There are a wide range of regulatory mechanisms available, and good regulators will typically seek to adapt and evolve practices in response to change and to improve. This sometimes requires consultation so that the consequences of change are understood, including the impact of reducing protections. Removing regulations altogether may require changes to legislation.

New digital, data and technological tools offer the potential to improve efficiencies in regulatory practice. Many regulators, including Ofsted, Independent Parliamentary Standards Authority (IPSA), the Civil Aviation Authority (CAA) and Medical Healthcare products Regulatory Authority (MHRA), use large-scale data analysis automatically to identify potential areas of non-compliance, then followed up by members of staff.

Efficient regulatory regimes are those where the system being regulated works well for all interested parties, whether they are producers and consumers, service providers and users, and governments and taxpayers.  

c. The conditions for good regulation can be improved.             

The UK is already a global leader in regulatory practice. We have a range of regulators in all sectors of the economy, including some, such as the MHRA, CAA and IPSA, that are acknowledged world leaders in their fields. There are also relatively few countries internationally that consider regulatory theory and practice in the way that we are already doing in the UK. For example, the General Medical Council (GMC) runs assessments to ensure that overseas doctors wanting to practice in the UK meet standards for safe care including language and professional skills, where this can't be determined by other routes to registration. We know that some other countries recognise the UK assessments for their purposes, demonstrating high levels of confidence in UK regulatory practice.

However, regulation as a discipline, and as a profession, remains early in maturity. Much could be done to improve the capability and capacity of regulation in the UK.

For example, good regulation requires a strong talent pipeline of capable, skilled and knowledgeable professionals. The UK currently lacks professional career pathways in regulation, and there is no ‘regulation’ profession for public servants in the way there is for policy civil servants or for scientists, economists, and statisticians. This limits the potential for UK businesses and citizens to benefit from leading regulatory practice.

As a membership organisation, the Institute of Regulation is working to improve professional development to boost the UK’s regulatory skills base. The IoR has links with regulatory experts in universities in the UK and overseas, as well as with parallel professional networks of regulators in Australia, New Zealand, the USA, Canada and elsewhere.

The Government and Parliament have important roles to play too. For example, when it is decided to establish new regulatory bodies, such as recently the Office for Environmental Protection (OEP) or shortly the football regulator, legislators and their advisors should be able to draw on expertise and insight from regulatory experts. It is unclear whether ministers, civil servants and parliamentarians currently have ready access to the latest insight on good regulation and evidence on the latest regulatory practice.

The IoR and its members, as appropriate, are willing to offer support to this Committee and others to improve awareness and understanding of good regulation for the benefit of the UK. 

4. Consultation response

a. Are UK regulators being given a clear job to do?

There are over 90 regulatory bodies in the UK. Most of these are statutory bodies, but others have a different legal status. Many UK regulators were created in response to specific circumstances within a particular sector. For example, IPSA was created to regulate MPs’ costs following the 2009 expenses scandal; and the Building Safety Regulator was established after the Grenfell tragedy. A football regulator is now to be established following concerns expressed by fans and others. In other circumstances, regulators are abolished, overhauled, or re-established following perceived failures in previous regulatory regimes. This has happened in the regulation of health, audit, financial services, and local government.

In each of these cases, Government ministers and their civil servants may understandably seek to work quickly to address public concerns. In doing so, they may focus more on the immediate problems to be solved, rather than on a more holistic understanding of the system to be regulated. Due to time or resource constraints, they may draw only on limited experience or expertise of regulation within the immediate sector to be regulated. Without access to wider expertise, it may be difficult to learn lessons from elsewhere, including from other sectors and countries, when establishing regulatory frameworks.

The result is that different UK regulators are given a variety of directions when undertaking their work. In some cases, the statute is clear, supplemented by annual letters from ministers on current priorities. In other cases, the relevant legislation is unclear or out of date, and the regulators are given multiple, sometimes conflicting directions on priorities. In addition, new requirements or duties may be added to the role of regulators over time, including requirements to focus on economic growth, environmental sustainability, or the safe use of artificial intelligence (AI).

A clear, more methodical, and consistent approach to directing UK regulators may improve the clarity of regulatory objectives and expectations, and thereby improve regulators’ potential performance.

b. Is the right balance being struck between the responsibilities of regulators and those of the Government, particularly where there are political or distributional trade-offs that need to be resolved?

There is considerable variation in the balance of regulatory responsibilities between government and different regulators within the UK. This is in part due to the variety of the statutory forms of UK regulators, and how they are governed and directed.

Where there are political or strategic trade-offs to be made, these are properly matters for elected politicians. Ideally discussions on such matters take place between the regulators and ministers, with any such trade-offs made explicit to the regulator in an annual letter of priorities. This ensures a regulator has a clear steer and may be held accountable for implementation. It should be noted that not all regulators receive such annual letters of priorities.

In other cases, the trade-offs required may be more detailed or tactical in nature. This is where a regulator may be able to have greater discretion to determine an appropriate balance, while always operating within an agreed regulatory regime and in line with the law, with the regulators themselves always accountable to government and to parliament for their performance.

c. Are regulators appropriately independent of government? Is the right balance being struck between strategic and political input from government and preserving the operational independence of the regulators?

This is variable and contingent on the specific legislation which established the individual regulator and the nature of their statutory relationship with the Government. Some, such as Ofsted, are non-ministerial departments; others, such as the Equalities and Human Rights Commission (EHRC) are independent arms-length bodies of government, and others, such as the General Medical Council (GMC), are charities with their own governing bodies, but ultimately responsible to the UK Parliament.

It is, however, necessary, and right for all regulators to be accountable democratically. They work on behalf of the public, after all. Elected politicians in Government and Parliament will legitimately wish to ensure that regulation is proportionate and effective, and achieving relevant policy outcomes. Exactly how this is done will differ between regulators, including as a result of the relationship between the regulator and the relevant government department and any aligned select committee in Parliament.

The relationship between accountability and independence in the context of constitutional regulators, such as the Electoral Commission, IPSA, the Boundary Commission and the Parliamentary Commissioner for Standards, was explored by the Constitution Unit of University College London in 2022[3].

d. Does the Government provide too much or too little guidance to regulators in making decisions, particularly in deciding between different objectives and priorities?

There does not appear to be a consistent approach to regulatory guidance from Government across regulators in the UK. In some sectors, where political and public interest is high, or where the areas regulated are new or contentious, there may be more interest in the level of guidance to regulators. In other areas less in the public eye, interested parties may be less concerned whether there is too much, or too little guidance given to regulators.

It is likely that most UK regulators, as well as those they regulate, will favour clarity and consistency in the guidance given so that a clear regulatory framework can be created and implemented within which operational decisions can be made, without compromising regulatory agility.

It is the role of the Government and, where appropriate, Parliament to set a clear regulatory framework with agreed outcomes, which regulators must then put into practice and subsequently be held accountable for their decisions and actions.

e. Are the roles and remits of different regulators sufficiently discrete, or is there overlap and duplication?

Without a detailed analysis across the UK regulatory landscape, it is difficult to determine whether roles and remits are sufficiently discrete.

Regulators may have a common focus but play distinct roles. For instance, IPSA, the Electoral Commission, Advisory Committee on Business Appointments (ACOBA) and the Parliamentary Commissioner for Standards all regulate politicians. Their roles are distinct, with different functions, different reporting, and accountability arrangements, and requiring different skills too. Similarly, there are several regulators of health professionals and services, and of the legal professions as well.

Some may wish to bring such regulators together to improve efficiencies and reduce possible duplication, while others may assert that consolidated regulators could risk losing specific expertise, become too unwieldy or too powerful and that the relevant regulators already work closely with each other where appropriate.

Any assessment of regulatory roles and remits requires careful analysis, matched with a detailed understanding of sectoral issues, before assessing the potential for reconfiguration of regulatory responsibilities.

f. How effectively do regulators co-operate with one another, and how could this be improved?

There is a growing need for national and international regulatory networks, as the use of digital, data and technology are accelerating business and service offerings across territories, requiring greater collaboration on cross-border issues of importance to consumers, businesses and governments.

Many regulators work effectively together, particularly where they work within the same sector.

Health regulators have strong links, for example, including between those in Scotland, Northern Ireland, England, and Wales, and between bodies within the same jurisdiction, such as the Care Quality Commission (CQC), GMC, MHRA, Nursing and Midwifery Council (NMC) and others. Professional healthcare regulators share data and regularly collaborate across many different forums. The UK regulators’ network (UKRN) is a similar group of 13 large economic regulators.

To create an open network among all those working and interested in regulation, the Institute of Regulation (IoR) was formed in 2021 as a cross-sector, peer network to help improve UK regulation. The IoR has a membership of regulators, universities, business, and organisations from overseas.

The IoR supports eight special interest groups, specifically designed to address the core strategic and operational focus of regulators, enabling peers and experts to improve awareness and share learning on good regulatory practice. There are networks, for example, on the use of digital and data by regulators, on what makes good regulatory enforcement, on risk management, and on issues of regulatory policy.

The IoR, through its conferences, webinars, podcasts, meetings, special interest groups and informal networks, will continue to support improved collaboration within the UK regulatory community.

g. Do the UK’s regulators have the necessary skills, capabilities, and expertise internally to perform the roles they have been given? If they do not, how could this be improved?

Good regulation requires skilled practitioners, with significant intellectual and technical capabilities. There are currently no dedicated professional development career pathways supporting regulatory professionals in the UK. This is a leading concern for the IoR.

Many regulators have highly skilled staff, with a deep knowledge of the sectors they regulate and of the tools they need to regulate effectively. Without supported professional career routes, their development is often contingent on work experience and informal personal and professional networks. The IoR, working with partners in businesses and universities, wishes to remedy this gap.

The IoR currently offers two introductory courses on regulation. One is a two-hour ‘introduction to regulation’ for those newly started in regulators, A second is a two-day ‘fundamentals of regulation’ course, provided by Professor Martin Lodge, an expert in risk and regulation from the London School of Economics.

In 2024, IoR will extend its professional development offering to non-executive and executive leaders in regulation with a ‘masterclass’ programme. The IoR expects to continue to grow its professional development offering over time, drawing on experience from regulatory experts within the UK and internationally.

The Committee may also wish to consider whether parliamentarians, ministers and civil servants could benefit from a more comprehensive and up-to-date appreciation of regulatory theory, techniques, and practice, to enable them also to help improve UK regulation.

The IoR will continue to explore partnerships and collaborative opportunities to strengthen professional development opportunities for UK regulatory professionals.

h. Who should hold the regulators accountable for their performance against their objectives? What is the appropriate role of Parliament in performing this scrutiny role?

All regulators should be democratically accountable. Precisely how they are accountable depends on the terms set out in their founding legislation, where this applies. In most cases, this is to Government, through a sponsoring department.

Regulators may also be accountable to Parliament, particularly to the Select Committee that oversees the sector they regulate. Regulators, if led by an Accounting Officer, are also held to account by Parliament, advised by the National Audit Office, for the public money they spend and the outcomes that they achieve. This is a further opportunity for regulators to report on how they balance the needs of the businesses and other bodies they regulate with those of the consumers and service users they protect.

Regulators are also publicly accountable, through robust transparency mechanisms and adherence to the ‘Nolan principles’[4] of conduct in public life.

i. How should the Government and the regulators themselves facilitate appropriate scrutiny and accountability of regulators? Are regulators sufficiently transparent about their own performance?

Annual reports enable regulators to demonstrate how they are achieving their objectives, providing clarity for scrutiny by and accountability to Select Committees and audit by National Audit Office (NAO). This supplements other accountability to Government through any sponsoring department.

Important too is their adherence to high standards of transparency, such as by publishing minutes of meetings, where appropriate, and responding to Freedom of Information (FOI) requests. Many regulators also regularly hold public meetings with different stakeholders and other interested parties on the issues of relevance to their remit. The way that regulators do this differs case by case. 

j. What mechanisms and metrics could be used to hold regulators accountable on a regular and ongoing basis and to judge whether a regulator is performing well?

All regulators have competing demands, though the specific nature of these demands will differ from sector to sector and regulator to regulator.

In addition to accountability and independent decision making, regulators typically focus on five common challenges:

1. Improvement: helping regulated groups, whether they are businesses or public services, to innovate and improve, to benefit those they serve.
2. Protection: ensuring that users or consumers are protected, particularly the most vulnerable, so that people cannot buy dangerous products or be treated by an unqualified professional.
3. Efficiency: ensuring the regulatory regime is as proportionate and efficient as possible; strong enough to protect the vulnerable, while not so strong as to constrain the improvement of those regulated and resourced as necessary to do the job effectively.
4. Agility: being agile enough to adjust to a changed operating context, including political and economic changes, and to balance the changing needs of current taxpayers and future generations, and of producers and consumers.
5. Transparency: remaining transparent about their work and their decisions, and democratically accountable for delivery and outcomes.

k. Do any of the UK’s international comparators address the above questions particularly well? What lessons, if any, can the UK learn from other jurisdictions on these matters?

The UK appears to be a leading country internationally in its understanding and use of regulation. 

Other countries with leading regulatory practice are New Zealand and Australia, with good practice also in some sectors in the United States, India, Chile, the Netherlands, and Canada. The IoR has links with similar professional networks in many of these countries.

30 November 2023